Gold kicked off Monday’s session with a soft positive momentum following last week’s consolidation around 1,740 and along the dashed restrictive line, which has been occasionally acting as support to downside corrections over the past two months.
Technically, there is no clear sign that the bulls will take the upper hand in the short term as the RSI is maintaining September’s downtrend below its 50 neutral mark despite the confluence with a former support region, while the MACD remains negatively charged below its zero and signal lines. Meanwhile, the simple moving average (SMA) lines have yet to choose direction, also providing little information about whether the horizontal trading in the short-term window could change soon.
The 1,835 ceiling remains the threshold for short-term traders to confidently resume buying interest, but prior to that, the price will need to overcome the nearby 1,785 – 1,800 resistance territory, where the SMAs happen to be at the moment. If the wall at 1,835 finally collapses, the price could advance to meet the 1,870 barrier, a break of which is required for a rally up to the key 1,900 – 1,916 zone. Any significant move above from here would question the long-term downtrend from the record high of 2,079.
Alternatively, a close below the 1,717 – 1,737 zone could see an extension towards the 1,680 base. Driving lower, the precious metal could chart a new lower low somewhere between 1,640 and 1,600, worsening the long-term bearish outlook.
In brief, gold is trying to recoup some lost ground, but downside risks are still elevated according to technical indicators. Unless the 1,835 bar gives way, an outlook deterioration in the short-term picture cannot be excluded.